The Microfinance Support Centre and the Private Sector Foundation Uganda have signed a memorandum of understanding in a bid to extend financial services to SMEs.
The function was held at the Microfinance Centre headquarters along Nakasero road in Kampala on Tuesday afternoon.
Speaking at the function, Microfinance Support Centre Executive Director, John Peter Mujuni said the relationship will go a long way to help impact the private sector, especially the small and medium enterprises.
“This memorandum of understanding should come much earlier due to our common areas of interest. We need to have a development impact on our communities,”Mujuni said.
In response, the Private Sector Foundation Uganda Executive Director, Gideon Badagawa said one of the biggest challenges for SMEs has always been accessing credit, adding that the new relationship will help solve it.
“Most SMEs whether involved in agriculture, transport or any other field, their main challenge is business finance. The new relationship will come in handy to help the private sector greatly.”
Badagawa was however quick to add that before SMEs get credit, they ought to be taught financial management skills or lese all the money would be lost.
“The Memorandum of Understanding is a good idea to help us work together with the Microfinance Support Centre to promote financial inclusion through financial literacy,” he noted.
“Many of our people get money but don’t know how to handle it and end up having it in vain.”
The Private Sector Foundation Managing Director cited an example of the youth livelihood where funds are available for youths but many have failed to benefit out it.
He said that due to lack of training on how to handle funds, much of the money that goes to SMEs is ill-fated and will not yield any results.
“This relationship will help SME holders get training that will be useful to them as they get funds from the Microfinance Support Centre,”Badagawa said.
“Private Sector Foundation will be doing skills development by training the holders and dressing them well before they borrow money from you.”
He noted that there is also to organize SMEs before they are able to benefit from the Microfinance Support Centre money.
Incorporated in 2001 as a company limited by guarantee, the Microfinance Support Centre is as part of government’s effort to promote access to affordable financial services for increased employment and wealth.
The Microfinance Support Centre is under direct supervision of the Ministry of Finance and Economic Development. It extends credit to Microfinance institutions including Saccos which in turn lend to their individual members.